Fiduciary Liability Basics for New York and Other Businesses in any Industry (entertainment, technology, retail, manufacturing, etc.)
Being that our firm routinely consults clients that serve in a fiduciary capacity, I thought it a good idea to mentioned particular class of insurance coverage that many overlook, Fiduciary Liability Insurance. In almost any industry (entertainment, technology, retail, manufacturing) fiduciary concerns arise in ways that often missed or willfully ignored. The most serious of these is the management of an employee fund of some kind (e.g., 401K) or managing capital invested into a project (e.g., a private offering to fund a film or restaurant). Fiduciary Liability Insurance deals specifically with this as further described below and all businesses should take the time to consider whether such coverage is a worthwhile investment.
Fiduciary Liability Insurance
Fiduciary Liability protects the personal assets of company fiduciaries, as well as the financial assets of the company and employee benefits plans against lawsuits. The Employment Retirement Income Security Act of 1974 (ERISA) enables fiduciaries to be held personally liable for losses to a benefit plan incurred as a result of their alleged errors, omission, or breach of their fiduciary duties.
- Fiduciary Liability can involve a broad range of allegations:
- Denial or change (reduction) of benefits
- Administrative error
- Improper Advice or Counsel
- Wrongful termination of a plan
- Failure to adequately fund a plan
- Conflicts of interest
- Imprudent investment of assets or lack of investment diversity
- Imprudent choice of insurance company, mutual fund, or third party service provider.
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